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New landlord tax changes- bad time to remortgage?
pootleflump
Posts: 100 Forumite
My husband is in the forces and we live service accommodation. We own a flat which we let out, so that we're on the property ladder.
We would like to buy another small house which we will use at weekends and school holidays. Our plan was to release some equity from our flat (around £35k), to add to our saved deposit of £50k, to keep the mortgage needed to around £115k. However, the mortgage on the flat is on a very good deal (BoE base rate + 0.49%), and it's also a residential mortgage with consent to let. If I remortgage, I'd have to switch to a BTL mortgage.
My issue is: I pay very little interest on the mortgage, so there isn't much to deduct from my gross income when it comes to completing my tax return, leaving me with a tax bill each year. My thinking was, that if the amount owing on the mortgage was higher, I would pay less tax. However, I have now read that as of 2017, mortgage interest will no longer be tax deductable. I asked my mortgage advisor about this, and she said that it wouldn't affect me as a basic rate tax payer, is she right?
Would it be a bad move to remortgage on my current deal, and should I instead just look for a property £35k cheaper (not easy where we're looking)?
Complicated, but hopefully someone can advise.
We would like to buy another small house which we will use at weekends and school holidays. Our plan was to release some equity from our flat (around £35k), to add to our saved deposit of £50k, to keep the mortgage needed to around £115k. However, the mortgage on the flat is on a very good deal (BoE base rate + 0.49%), and it's also a residential mortgage with consent to let. If I remortgage, I'd have to switch to a BTL mortgage.
My issue is: I pay very little interest on the mortgage, so there isn't much to deduct from my gross income when it comes to completing my tax return, leaving me with a tax bill each year. My thinking was, that if the amount owing on the mortgage was higher, I would pay less tax. However, I have now read that as of 2017, mortgage interest will no longer be tax deductable. I asked my mortgage advisor about this, and she said that it wouldn't affect me as a basic rate tax payer, is she right?
Would it be a bad move to remortgage on my current deal, and should I instead just look for a property £35k cheaper (not easy where we're looking)?
Complicated, but hopefully someone can advise.
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Comments
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The info on mortgage interest is right, deduction is likely to be basic rate but not higher rate, so if you're a basic rate taxpayer you'll be fine and can still deduct it. Is that place just in your name, if you're declaring all the income as yours rather than splitting it between you?
You do need to understand that you'll be liable for extra stamp duty (extra 3%) on the purchase if anyone on the title deeds already owns a property. If the first property is just in your name (and therefore legitimately all rental income would be your income), your OH could buy the second property in his name and avid the extra 3% charge (assuming there aren't more properties involved).Mortgage Free thanks to ill-health retirement0 -
Tax is the tail. Don't let it wag the dog!0
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Yes, the flat is only in my name. The new house will be in only my husband's name.
So, I don't necessarily have to rule out remortgaging then...0
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